Ask The Right Questions, Save Thousands
When you need a student loan, often the first step is to ask your Financial Aid Office for guidance. You assume they look at all the lenders in the marketplace and make the best choices.
Financial Aid Office
The department at your school that provides assistance and guidance to students and parents related to the funding of education. They are involved in preparing financial aid packages for students, and they are a good place to go for information on scholarships, grants, and other ways to reduce school costs. They may not be a good source for advice on choosing a lender.
Lender
A company that offers student loans is known as a lender. MyRichUncle is a national, full-service lender offering a broad scope of loans to students across the country.
The Student Loan Marketplace
The collection of all commercial lenders that exist, offering both private and federal loans. This marketplace constantly shifts and evolves, making it crucial for students to research loans for themselves.
Often this is not how the process works. Your school's Financial Aid Administrators may be in the habit of working with lenders with whom they are familiar, rather than lenders who offer the best loans.
So unless you check for yourself, how do you know you're getting the best student loan? How can you be sure?
Often your Financial Aid Office will steer you towards a list they keep, called the Preferred Lender List. It is imperative that you ask questions about the Preferred Lender List regarding rates and repayment options.
We've made it easy – just use this checklist. Ask your financial aid office these questions:
| "CAN YOU GUARANTEE THE LOWEST LOAN RATES?" Your financial aid office may let you think they’re getting you the lowest rates. The truth is, they’d need to be constantly researching every lender and every loan, in real time, to determine the lowest rates. They don’t have the time or resources for that. Instead, they may simply pick whichever lenders make the process easier for them. |
| "DO YOU PARTICIPATE IN REVENUE SHARING?" Also known as "kickbacks". In this scheme, the lender pays the school for directing you to its loan program. Sometimes, a percentage of your loan balance is paid back to the school. You, the student, bear the cost of this, and you may be getting a bad rate. Even if the school claims to use the kickback for good purposes, why squeeze you? |
| "DO YOU HAVE ANY MEMOS OF UNDERSTANDING?"
A lender and the Financial Aid Office may share a memorandum of understanding or other legal agreement. If they do, ask for a copy. Such agreements may designate that lender to be the exclusive provider of loans at the school. |
| "WHAT WAS YOUR LENDER SELECTION PROCESS?" A Financial Aid Office may have a closed process by which it selects the lenders it works with. They will refuse to work with other lenders no matter how competitive their rates or benefits. |
| "DO YOU ACCEPT INDUCEMENTS FROM LENDERS?" Also known as "payola". Make sure that none of the administrators or counselors have received any gifts, expense paid trips, etc. from lenders. |
| "DO YOUR LENDERS PROVIDE OVERRIDE POOLS?" This is an arrangement made between the Financial Aid Office and a lender that benefits both parties, at the expense of students. In exchange for a certain number of loans— for example, to ten students— a lender promises to "override" its decision to reject one student whose credit history normally would not qualify him for a loan, and this student is instead approved. The school profits from the extra tuition they receive from that student, and the lender profits from all the borrowers it receives thanks to the school. |
| "DO YOU HAVE A SCHOOOL AS LENDER PROGRAM?" Also known as a "vanity loan". The Financial Aid Office offers a loan to their students under the school’s own name. The brand familiarity creates a natural affinity and students flock to the loan. Behind the scenes, the school simply farms out the loan to an actual lender. None of this is made clear to the student. The lender, as you might expect by now, pays the school a "referral fee". Guess who ends up paying that fee in the end? |
| "DO YOU HAVE PERSONAL RELATIONSHIPS WITH LENDERS?" We believe that the decision to work with a lender or not should be based on the merits of the product, not the warmth of a sales rep’s handshake. |
Why This Matters
It matters because this is your loan, and it will be your responsibility to pay it back. That's why you need to know your options.
Most Financial Aid Administrators are not certified financial planners. They have no right to dictate which lender you choose, and this is true for both private and federal loans. No matter what they say, the law states that they cannot refuse to certify loans from other lenders, even ones YOU choose.
Certified Financial Planner
Certified Financial Planners are qualified to advise clients on a variety of financial matters. To become certified, planners must meet educational, experience, and ethical standards.
At MyRichUncle, we think it's all about choice. Giving up your choice and blindly trusting your Financial Aid Office could cost you thousands of dollars and years of unnecessary hardship. Again: you must ask questions.
The Next Step
If you want to know more about the specific loans offered by MyRichUncle, select an option from the menu. If you’re ready to apply, click here.
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